by bjamm1972 » Wed May 27, 2009 01:15 am
My ex-husband passed away about a month ago. We just found out that my ex's dad was beneficiary with our 14 year old son as 2nd on the policy. My ex's dad passed away 2 years ago and that leaves our son as beneficiary on the policy (which is a large policy) we live in Illinois. What are the laws? What do I need to do?
Posted: Wed May 27, 2009 05:17 am Post Subject:
(215 ILCS 5/229) (from Ch. 73, par. 841) Illinois Law States:
If the policy shall be in force at the death of the insured, the proceeds thereof shall be payable to the named beneficiary if living, but unless proof of claim in the manner and form required by the policy, accompanied by delivery of the policy for surrender, has been made by such beneficiary within fifteen days after the death of the insured, then upon the expiration of said fifteen days, or if the beneficiary is the estate of the insured, or is a minor, or is not legally qualified to give a valid release or dies before the insured, the company may pay to any person permitted by the policy.
Simply put, your minor son is the contingent beneficiary, but since the death of your ex-father in law occurred as well, your son "moves up" to primary beneficiary, so to speak. Since Illinois law appears to default to the insurance policy, is there any chance that you have it or can get your hands on it? In these cases, there are normally arrangements made in advance of the death(s), but this happens. There are all sorts of trust arrangements, and I would suggest that you ask the company to not make any payments just yet until you sort a few things out.
First, can you get the policy? Secondly, if not- it might not be a bad idea to see who the insurer was going to pay or if they were waiting for instructions from you. I'm going to get another forum expert in here to help you out as well.
Keep us informed as to what's going on, ok?
InsTeacher 8)
Posted: Wed May 27, 2009 06:07 am Post Subject:
Bjamm, who is the guardian of the child? It seems that the insurer wouldn't pay directly to a minor.
By the way, Teacher, if the OP can't submit the policy document, what would be her chance then to receive the claim on behalf of her son?
Posted: Wed May 27, 2009 10:23 am Post Subject:
Sorry about your loss. Congratulations on your son's gain.
Simply contact the insurance company and they'll tell you what to do. Most likely, the'll be some claim paperwork to fill out and they'll want proof of death of both your ex and the primary beneficiary.
If a trust account has not been set up, this will have to be done. This is not a complicated thing and does not require an attorney or any special forms. The account is called an UTMA. You can control the money and it can be used for basically anything as long as the purpose is to benefit your son.
Posted: Wed May 27, 2009 12:08 pm Post Subject:
This is an interesting thread.
A couple of things that jump out at me is the money belongs to the 14 years old.
This is good and bad.
Mom, of course, is the legal guardian of the PERSON, but she does not own the money.
I don't believe the Uniform Transfer to Minors Act (UTMA) is applicable for the payment of life insurance DEATH BENEFITS. I believe that is for GIFTS TO MINORS.
See THIS LINKY from State Farm.
The insurance company has a legal problem here. It would be my best educated guess the insurance company would hold those fund IN TRUST FOR the 14 year old until his age 18.
AND I would guess they would NOT release any funds to Mom or child WITHOUT a court order. Someone AND YES IT WOULD BE MOM needs to be appointed trustee for the minor child's property.
AND my next words are going to anger most all women but the 14 year old needs his own attorney to protect his interest. That won't happen. Mom will be appointed the minor's trustee and she will be able to do as she pleases with those funds.
Please don't take my words as harsh. I've seen women steal money from their minor children because they don't AGREE with who they "think" the money belongs to.
Posted: Wed May 27, 2009 12:43 pm Post Subject:
LOL Gary...I would say that anyone...a mother or a father might steal money from their child. Whether it was good old fashioned selfishness for self serving reasons...or in the case of my ex....just really bad financial decisions.
So maybe you should change that response to "parents" instead of women. ;)
Posted: Wed May 27, 2009 02:35 pm Post Subject:
So maybe you should change that response to "parents" instead of women.
Good idea, it does goes both ways.
Sorry, please no hate mail.
Amended reply:
Please don't take my words as harsh. I've seen [PARENTS] steal money from their minor children because they don't AGREE with who they "think" the money belongs to.
Posted: Wed May 27, 2009 06:00 pm Post Subject:
thank you to all who replied...this is so confusing to me. ok, i am the guardian of our son, i also had full custody before my ex's death. i have contacted an attorney, who said i should set up a legal guardianship in court, incase the insurance(which is Prudential)company requires it. today, i was finally able to get the death certificate along with my ex father in law's death certificate to the coal mine in which my ex worked. since this was a group policy, it goes through the coal mine, they will expedite the information i have to Prudential. so, i guess i just have to wait to hear from the insurance company, but the employer is being very helpful. to make matters worse, there is a lawsuit for a large sum of money, my ex was about to settle for from workers comp when he broke his back at work, plus a 401k policy. i believe my son is entitled to 50% of that, is that correct? my ex was remarried about 1 year ago. i totally understand that some people would steal money, even from their own children. that is why i definatly want to do the right thing...according to the law. i just hope that my sons money does not get tied up in court for years. thanks for any help
Posted: Wed May 27, 2009 07:52 pm Post Subject:
bjamm1972, thanks for coming back to your thread and providing more information.
The reason it seems confusing is because there are two separate types of "guardians."
One is the guardian of the PERSON. You're that GUARDIAN because you're Mom.
The other guardian is the guardian of the minor child's property. You're NOT that person just because you're the minor child's Mom with respect to the payment of life insurance death benefits.
This is what the attorney is talking about. Going to court and having you appointed as GUARDIAN (trustee) of the minor child's property (money).
Many times when we're working with young couples and setting up their Estate Plans is quite common for them to name one person as the guardian of the child because they are a great caretakers but may not be worth a damn with money. So they will name someone else as trustee of the minor's money.
Posted: Thu May 28, 2009 12:16 am Post Subject:
I don't believe the Uniform Transfer to Minors Act (UTMA) is applicable for the payment of life insurance DEATH BENEFITS. I believe that is for GIFTS TO MINORS.
See THIS LINKY from State Farm.
Gary, I'm not sure what about that link leads you to believen that it would have to be an UGMA instead of an UTMA. Anything that can go into an UGMA can also go into an UTMA. The reverse is not true. I can't think of a single reason to use an UGMA over an UTMA.
The insurance company has a legal problem here. It would be my best educated guess the insurance company would hold those fund IN TRUST FOR the 14 year old until his age 18.
The insurance company would like the money to be in a trust account at the insurance company so that they can earn fees on the money. However, I don't think that they have the ability to just hold onto the money into a trust. They can't just decide to name themself trustee. Instead, until the money is paid out, it will accumulate at interest.
AND I would guess they would NOT release any funds to Mom or child WITHOUT a court order. Someone AND YES IT WOULD BE MOM needs to be appointed trustee for the minor child's property.
The reason that a trust account needs to be established is that a minor can't control their own bank account or investment account. If the insurance company sends a large check to a minor and an UTMA/UGMA account isn't established, the minor can't do anything with the proceeds. If the child is the rightful beneficiary, it won't take a court order to release the funds. The money won't be released to the mother. It will be released to the child.
AND my next words are going to anger most all women but the 14 year old needs his own attorney to protect his interest. That won't happen. Mom will be appointed the minor's trustee and she will be able to do as she pleases with those funds.
Legally, mom, or whoever the trustee is, must use the money for the benefit of the child. However, there is no "UTMA Police". If the trustee uses the money for other purposes, the trustee will have to be sued.
Posted: Thu May 28, 2009 06:37 am Post Subject:
I tend to agree with Expert. Since there is no monitoring body to oversee the activity of the trust, the trustees can actually misuse the money. But, it’s not the problem with the young couple only. Another factor is the 'trust'. You may believe the particular person you have chosen would always prioritize the interest of your child, but people do change, don't they?
I'd like to learn the best way to set-up the trust for a kid so that I can sleep in peace at the nights.
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